There are many reasons that lead to families having single parents. Be it because of death, divorce, choice, or other reasons, every single parent faces many challenges including financial challenges.
Even for the most prepared ones, budget struggles for childcare and unexpected events may lead to them taking on loans, falling into debt traps, or saving up for their children’s futures may seem very difficult at times.
Below are 5 factors that single parents often succumb to that lead to debt and how they can mitigate them:
It takes a lot of time, effort, and resources for 2 people to raise a child until they can live on their own, let alone one. Unless you are eligible to receive financial contributions from your ex-partner, supporting yourself and your child can be financially challenging.
One way to ease this burden is by moving in with your family or a friend who is in similar circumstances. By sharing living costs, and chores, you can reduce the burden of being a single parent even if you are financially separated.
2. Child support
If you are legally separated from your partner for any reason, you are generally entitled to child support from them. However, a study by the U.S. Census Bureau in 2018 has found that less than 50% of parents received full child support.
This poses a challenge in maintaining a consistent budget. Hence, single parents should ensure that they allocate their income for basic living expenses, such as food, rent, insurance, etc.
3. Debt trap
Having debt is expensive. Single parents who take on loans may find themselves at risk of a debt cycle that is difficult to get out of because they take more loans to pay off their debt which results in more debts. You will find interest in eating up your income and saving. In the worse case, your credit scoring will go down if you cannot pay your debt on time, making it harder to take a loan for important things later like buying a home.
To prevent falling into a debt trap, it is crucial to set a budget, to control your income and expenses. Next, track your expenses to see if it is going to the right place, and finally, cut down on unnecessary as much as possible until you paid off your expensive debts.
Working single parents often find themselves buying takeaways because they do not have the time and energy to cook. Take-aways are expensive, so to tackle this problem, try to cook multiple portions of meals (breakfast, lunch, and dinner) and freeze them for later. If you live with someone, arrange to share shopping errands with them. This way, you can ensure that there are foods at home and cut down some spending on outside food.
5. Not Considering Insurance
Many single parents tend to prioritize their children’s needs and forget about themselves and therefore neglect things like life and disability insurance because they cannot afford to pay for it.
In fact, they are important safety nets, especially since you don’t have a spouse to fall back on when you are unable to provide financial needs for your children. If you cannot afford full-term insurance, consider buying as the basic coverage. You may be able to increase it later. If you are also planning to save for your child’s college education, consider a coverage amount that is enough to cover that too if something happens to you.
Knowing that you are not alone in this struggle, can make it easier to ask for help when you need it. Combining the support with a good financial plan is the key to ensure you will be able to take excellent care of yourself and your child.
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